Do Bailouts disprove Conservative Economic Principles?

[Dark Hellion]

You are missing Graeme and Guardsman's point Stuart. Let's give you an analogy, I am a DOT engineer and someone builds a really shitty bridge in my state. Now the bridge is clearly a rickety POS but hundreds of people drive on it every day. I know it will fall eventually, but I don't even go and put a road closed sign on it. Instead, I close off an older adjacent bridge, meaning more poeple now drive over the POS bridge. The bridge collapses and people die. It was my responsibility, even though everyone could see that the bridge was going to fall down eventually. The drivers share some fault, but the primary culpability is clearly mine.

The fact that people are inherently greedy and stupid isn't something you can make go away by telling them to live prudently. You must enforce the prudence, and this is the banks responsibility. Yes, people where greedy and going out to get loans to "keep up with the Jones" and the like, and are guilty of that, but the primary culpability is on banks that gave loans that they shouldn't have, to people who shouldn't have had them. I don't just wish for a loan and magically get money, I go through someone (a bank) to get it, and if they won't give it to me, then I can't get it. The free money that was available helped to fuel the greed even more, it's like giving a addict heroine to get them to stop stealing money for heroine. Yes the person is at fault, but you are just assisting it, and making it easier for them to continue the destructive behavior.

[Stuart Mackey]

You are missing Graeme and Guardsman's point Stuart. Let's give you an analogy, I am a DOT engineer and someone builds a really shitty bridge in my state. Now the bridge is clearly a rickety POS but hundreds of people drive on it every day. I know it will fall eventually, but I don't even go and put a road closed sign on it. Instead, I close off an older adjacent bridge, meaning more poeple now drive over the POS bridge. The bridge collapses and people die. It was my responsibility, even though everyone could see that the bridge was going to fall down eventually. The drivers share some fault, but the primary culpability is clearly mine.

False analogy: An engineer has legal obligations of safety that must be met that have not been removed, unlike the US banking industry which has, I understand, has had certain prudential regulations removed by government, who I might add is elected. Also, one thing that I understand the US has a fear of is litigation due to negligence causing death, and rightly so.

The fact that people are inherently greedy and stupid isn't something you can make go away by telling them to live prudently. You must enforce the prudence, and this is the banks responsibility. Yes, people where greedy and going out to get loans to "keep up with the Jones" and the like, and are guilty of that, but the primary culpability is on banks that gave loans that they shouldn't have, to people who shouldn't have had them. I don't just wish for a loan and magically get money, I go through someone (a bank) to get it, and if they won't give it to me, then I can't get it. The free money that was available helped to fuel the greed even more, it's like giving a addict heroine to get them to stop stealing money for heroine. Yes the person is at fault, but you are just assisting it, and making it easier for them to continue the destructive behavior.

Did you miss where I mentioned that there was a systemic societal issue? did you miss where I pointed out that any system is no better than those people that it recruits from the society that it exists within? Of course it does not help that there also seems to be lack of accountability from top to bottom, but hey, its so much easier to blame others than yourself.

[Graeme Dice]

False analogy: An engineer has legal obligations of safety that must be met that have not been removed, unlike the US banking industry which has, I understand, has had certain prudential regulations removed by government, who I might add is elected. Also, one thing that I understand the US has a fear of is litigation due to negligence causing death, and rightly so.

Why is it a false analogy? If the banking system is so important, and credit is so dangerous to it, then why shouldn't it be regulated? You are making the assumption that the way things are is the way that things should be. Stating that something is not currently regulated does not absolve the people with the power and knowledge about that thing from their responsibility to make correct decisions. In the credit market, the banks have the power. They control who is allowed to receive credit. They also have the required knowledge to make decisions. The average citizen has neither this knowledge, nor the power to give themselves credit. Thus, it should be the the responsibility of the banks to ensure that they are not giving credit to somebody who cannot afford it.

[Darth Wong]

False analogy: An engineer has legal obligations of safety that must be met

And those legal obligations exist for a reason: the engineering profession is in the best position to prevent that kind of disaster. What reason do you have to explain why similar legal obligations should not be applied to the banking industry? What other industry or profession is in a better position to prevent the kind of disaster which occurred?

[Stuart Mackey]

False analogy: An engineer has legal obligations of safety that must be met

And those legal obligations exist for a reason: the engineering profession is in the best position to prevent that kind of disaster.

Yep.

What reason do you have to explain why similar legal obligations should not be applied to the banking industry?

Why should they regulate themselves? Its not that there should not be prudential regulations, but they obviously don't have the perspective or the judgement necessary for the job. Moreover they are not the only ones with the requisite skills to make the necessary regulations.

What other industry or profession is in a better position to prevent the kind of disaster which occurred?

With respect to the banking industry, it would be the government IMO, via an, hopefully objective and, independent, body. That's how NZ does it, at any rate, through the Reserve Bank which is legally independent and regulates the banking industry here, which does not have the issues the US does and is stable (Our problem is that we cannot control our spending as well, and around 25% of our funding is overseas sourced to finance our habits, which is big problem.)

[Stuart Mackey]

False analogy: An engineer has legal obligations of safety that must be met that have not been removed, unlike the US banking industry which has, I understand, has had certain prudential regulations removed by government, who I might add is elected. Also, one thing that I understand the US has a fear of is litigation due to negligence causing death, and rightly so.

Why is it a false analogy?

The US regulations were removed. The question that should be asked is 'why and for what reason'?

If the banking system is so important, and credit is so dangerous to it, then why shouldn't it be regulated?

Never said It shouldn't be, I have said, more or less, that that is a symptom of a society that lacks fiscal conservatism and that will inevitably feed through into its institutions.

You are making the assumption that the way things are is the way that things should be.

Bullshit. Back that one up please, I said no such thing.

Stating that something is not currently regulated does not absolve the people with the power and knowledge about that thing from their responsibility to make correct decisions.

And what are the correct decisions? They, the bank employee's, are there to make money, for themselves and for the company, I wont say that its morally right, its not, but that's the way that it is, they are not there to protect people from there own stupidity, that why you elect a government. As to government, the current US government, a bunch of fiscal non-conservatives if ever I saw any, has allowed it to happen through there own actions, and guess who voted for them, guess who advised them and what attitudes do they have?

In the credit market, the banks have the power. They control who is allowed to receive credit. They also have the required knowledge to make decisions. The average citizen has neither this knowledge, nor the power to give themselves credit.

So what? The average citizen does have the power to live within there means, and rich, poor and government alike have chosen not to do this.

Thus, it should be the the responsibility of the banks to ensure that they are not giving credit to somebody who cannot afford it.

But its not, and never was, when there was regulation its was from the government who, at some point, correctly decided that greed would trump common sense, that vast amounts of people lack common sense and education, and regulated those organisations who's job it is to make money by lending money. Unfortunately some in the US thought the boom times would continue without pause, and the necessary checks were removed.
I forget what rightwing idiot in the US said it, that the US didn't have to worry about its deficit, I guess they were wrong.

[Stuart Mackey]

that why you elect a government

Whoops, that should read

that why you elect a government, to protect you from those things you neither know about or understand

[Darth Wong]

False analogy: An engineer has legal obligations of safety that must be met

And those legal obligations exist for a reason: the engineering profession is in the best position to prevent that kind of disaster.

Yep.

What reason do you have to explain why similar legal obligations should not be applied to the banking industry?

Why should they regulate themselves? Its not that there should not be prudential regulations, but they obviously don't have the perspective or the judgement necessary for the job. Moreover they are not the only ones with the requisite skills to make the necessary regulations.

You misunderstand me. I never said that the banking industry should have self-regulation instead of government regulation; I was suggesting that it should have both. In engineering, we have self-regulating bodies, but we also have government regulation of the profession (and of the self-regulating body).